UK companies are required to make a quarterly report of VAT amount calculations to HRMC. Since the introduction of ‘Making Tax Digital for VAT’, VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are now required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns. This will be extended to all VAT-registered businesses from April 2022.
Arch is a small company, but as SAP experts, we have run our accounts on SAP ERP for many years. We use standard SAP functionality to generate quarterly VAT reports. Like other UK businesses we are required to submit the VAT report electronically using software.
Having reviewed the available options, we decided to build our own solution for this purpose.
We undertook a process of appraising the various options open to us to adhere to the Making Tax Digital (MTD) rules. These included:
Standard SAP solution using additional components in SAP Cloud
Third party hosted solution
Develop our own solution
We found the cost of the standard SAP solution inhibitive, so it was quite easy to rule out. The approach involved deploying powerful reporting software, but we needed a solution to integrate our back-end SAP solution to HMRC’s MTD services.
The available third-party solutions were either expensive, not integrated, or both. We didn’t see the benefit of exporting reporting data from SAP to a file for upload through a hosted service.
The option of developing our own solution involved us registering ourselves with HMRC as a provider of integration services, and then building the integration layer.
We quickly established that the development of a solution could be achieved using our own software suite, and we began by creating a proof-of-concept to call various HMRC services.
For speed, initially we designed an eForm solution using Varo, which pulled in VAT data from SAP by running the standard report. Then we added the integration to HRMC from the eForm.
Varo provides automatic benefits, such as a history of all the forms submitted, and an audit trail, plus the capability to reprocesses forms in error.
Having run the eForm solution on Varo for a several months, we decided to upgrade our solution to a Fiori app, using Stelo. This improved the usability and ensured that we made use of newer SAP UI technology.
The end-to-end process is easy to use, with seamless integration.
Since the first iteration of the Stelo app we have added enhancements to comply with additional requirements from HMRC.
The most obvious benefit to us is that it is free: We pay no subscription to any cloud service from SAP or a third party.
Secondly, we control the solution. We can add functionality in the future easily as the MTD needs or options change over time.
And thirdly, we’ve built a solution we can share. During 2021 we’re happy to make the app freely available to all users of Stelo in the UK, so that they too can enjoy the benefits of using Stelo for MTD.